THE NUMBERS DON'T LIE ... I'LL EXPLAIN AND YOU DECIDEDownload the article below

​This article is a must read for employers. It outlines and delivers a hands down argument that should not be ignored, especially in today’s economic turmoil. ​

​I’ve been on both sides of this question, as a former employee, as a company that hired employees and as an independent contractor. Here are my thoughts on this subject, especially as it pertains to senior level marketing positions within our industry.​First, let’s look at retail today and the looming economic factors companies are staring down today. I recently wrote extensively about this on my blog: http://www.social4retail.com/the-real-retail-economy-is-not-in-good-shape.html

It all boils down to “revenue vs. costs”; generate more revenue while minimizing costs.

I’ve always tried to post information that will help retailers and brands do more business with less cost to compete more effectively. Lately that has been about using technology as a means to mitigate costs efficiencies, gain more leads, sell more stuff and ultimately … “make more money”.

​As a marketing guy I’ve been blessed with having the best mentors in the business, as my professional journey took me from the printing/packaging industry, consumer product marketing, agency owner and now industry consultant. ​

The problem with the marketing profession today, is that most senior marketers have a job shelf-life of 18-24 months, OUCH. More on this later….

​SO ONWARD WITH THE DISCUSSION.

​According to the governments Bureau of Labor & Statistics (BLS) the “average” median pay for a senior level marketing person is approximately $124,850/year, or $60.03/Hour. BUT that is only the base cost and does NOT INCLUDE;

SO, DO I HAVE YOUR ATTENTION YET? IF NOT, LET’S DIVE DEEPER INTO THIS RABBIT HOLE.

I didn’t calculate the cost of the i.e. “Learning Curve” time and the resources for this new employee’s acclimation into your culture, business systems and processes.​Think about that for a minute. Other employee’s and time/resources expended in mentoring this new employee plus all those additional direct and indirectcosts, explained by the author, amortized into each employee’s “real cost”. Items such as;

Accounting fees

Advertising

Computer hardware

Computer software licenses

Conferences and trade shows

Corporate graphics and web design

Corporate taxes (property, etc.)

Dues and subscriptions

Equipment

Furniture – (Had to throw this one in there ;-)

Insurance (liability, workers comp, unemployment insurance, etc.)

Legal fees

Meals and entertainment

Meeting expenses

Office supplies

Overhead staff (executive, administrative)

Printing services

Recruiting (advertising and fees)

Travel

HERE’S THE REAL SHOCKER.

According to DCAA Accounting standards ... ​The real “ALL IN EMPLOYEE COSTS” for this person equates to $248,352.00/year or $119.00/Hour, figuring a base hourly rate of $60.03/hour and adding in all the additional costs outlined above.

​I know, the math is getting really obnoxious. But the math is going to get easy, very easy.

If you hire a consultant at $60.03/Hour to do the same job, that’s what you pay, plus any additional “authorized” ancillary or travel expenses.

The amount of infrastructure that a consultant uses is significantly less than that of an employee (not to mention the fact that the consultant doesn’t receive any benefits from the company).

As a result, the actual cost of a consultant is affected by G&A (General & Administrative) costs only; Fringe (i.e., benefits) and Overhead are irrelevant to the cost of a consultant.

Hyam also points out in his article;“Potential financial risks.Companies tend to make hire/fire decisions much more rapidly with consultants than with employees. It is not uncommon for under-performing employees to be kept on the payroll for multiple months, throughout various stages of probation, to minimize the potential for an employee-filed lawsuit. The resulting cost to the company can be quite substantial. In contrast, companies tend to dismiss consultants with minimal if any notice when in any way dissatisfied with their performance”. “Recruiting fees affect the cost ofallemployees.One obvious savings with consultants is the avoidance of often hefty recruiting fees. What may be less obvious, though, is that each recruiting fee paid drives up the real cost of allemployees. Since recruiting costs are including in overhead expenses, every recruiting expense that your company incurs increases your overhead costs, which in turn raises your overhead rate multiplier, which in turns drives up the effective cost of each and every one of your employees”.​

​AND THERE IS MORE ...

Liabilities.

​When you hire an individual, such as myself or my company, we take on all the liabilities and usually hold our client “harmless. We carry our own insurance, pay our own taxes, use our own computers, cell phones and more. Sure we bury those costs into our agreements, but they are minimal compared to your infrastructure.

To add to this, figure in the “ROI” of this hire. Remember in the beginning of this article I stated that most marketing people have a “shelf life” of 18-24 months?

Consider this, especially when the marketing paradigm is changing monthly. How much “real profound knowledge” does your current marketing person have? Do they adapt, change and grow with the times, or do they only practice what they knew when you hired them? My bet is that they don’t evolve, that’s why they have a short shelf-life.

​(More articles on this subject below)

SUMMARYHERE ARE SOME QUICK DISCUSSION POINTS OF USING​US VS. THEM

No long term employment commitment. When you hire a consultant make sure the engagement terms are usually very short – 3-6-12 months with 30-day renewal clauses for two reasons;

Speaking for myself, this gives me the opportunity to “fire you” should the synergy not work. For me, I will not work with/for someone who doesn’t want to listen and implement needed and/or proven strategies and tactics….and then when they fail to do what we suggest, they want to blame me or my company for not getting the job done or their investment ROI

A good consultant/company relationship should thrive based off synergies and exceeding goals without the need of a contract hanging over their heads. For us, we ONLY do short term contracts, usually 3-6 months with automatic 30 day renewals and 60-day “out clauses” for each. Our belief is that we want to addict you to the candy, not the medicine…with tangible results.

​Yep, we want you to WANT to keep paying us, so we'll work really hard to do that.

AND FINALLY, WHAT SHOULD YOU EXPECT TO PAY FOR A SEASONED, SUCCESSFUL CONSULTANT?

Well, that depends of course on the extent of your needs, the industry, the level of expertise needed and the time estimated to get your results.For us, it’s simple.

Our services range from $2,500/mth - $15,000/mth. Many of our engagements are in the lower end because what’s mostly needed is to create leads through messaging, creative, PR, go-to-market strategies and tactics, as long as the company has “in-place” the systems and processes to deliver on these promises. If they don’t, then we start there first, for anyone can create a “marketing promise”, but if you can’t deliver on that promise, consumers will abandon you and it will cost you 5X more to get them back.

When the consultant you want to hire has a track record of doing this, over and over in a multitude of positions and industries, it’s probably in their DNA to be successful with a short learning curve. If not, you execute your “out clause” and you will achieve one of two outcomes; Success or disappointment, but either way, you’ve saved a ton of money…and hopefully made even more.

And one additional note, confidentiality and non-compete. All of our agreements protect our clients with a one year, minimum, confidentiality and non-compete clause. These clauses are standard in our industry to protect the integrity of the business relationships so information can “free-flow” for strategic purposes.

Every company and situation is different so there’s no “one size fits all” answer here. But an awareness of the factors and issues discussed in this article will help arm you to make the best financial decision for you and your team.

I would like to tell that it can be intoxicating to run a sphere. Yes, of course, it can be challenging and costly. Although there is the cost of phone trappings, office space, payroll services, and the employees of your organization avail all these benefits for free, still I feel that an employee overhead is less than the oncosts of a consultant. I know a consultant is an expert who can help a business owner in making different crucial decisions. But I think he is less effective as compared to an employee in terms of consistency, availability, and dependability. If you want to make an effective startup, then hiring a business consultant will be beneficial. But if you want to make your ongoing business successful with lower cost, then hiring a new addition will be a smarter choice.

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About Bill Napier

Furniture Today Magazine has labeled Bill Napier as being a “disruptor” in the home furnishing industry and he loves that moniker!

In the 90’s, Bill’s marketing agency PMA Network (Promotional Marketing Associates, Inc.), with offices in Minneapolis and Chicago, launched many consumer brands, as well as being a strategic consultant for The Times Square Millennium Celebration.

He was hired by Ashley Furniture in 2000 as their Chief Marketing Officer (CMO) and was blessed to be part of their astronomic growth from $800MM – $2.7BN over his 5-year tenure.

He has also worked with two other furniture brands as CMO. He has been an industry consultant since 2007 and with his company Napier Marketing Group has developed and managed some of the largest promotions ever done in the industry.

Bill has developed and maintains the largest aggregated marketing informational website for retailers and brands: www.social4retail.com

Need help bringing a product/brand to market in the Home Furnishing's category? See what people have said about Napier Marketing Group's results from existing & former clients HEREbillnapier@napiermkt.com612-217-1297​

Napier Marketing Group is a leading B2B and B2C marketing & consulting agency servicing brands and retailers in a variety of industries throughout North America, including; the home furnishings industry, the technology industry, consumer products, retail, manufacturing and other industries that are focused on brands, retailers and suppliers that want to create market penetration and sales velocity.​​ We have an unwavering passion to drive velocity for both brands, retailers & their suppliers. We focus on where you are going to connect your brand with your customers throughout their journey. Let us show you how great creative and a well-thought-out strategy - complemented by tactical execution - can outsmart your competition... without having to outspend them.